United Wants to Grow at LAX, But There’s Not Much Room… For Anyone

LAX - Los Angeles, United

There are two big trends in airlines these days. The first is to start an ill-conceived subsidiary with an annoying single-word name and waste a bunch of time and money on it. The second is to grow in Los Angeles. At an employee meeting in LA, United President Scott Kirby confirmed as hinted previously that United wants to turn up the heat at LAX. The only question is… how?

Less than a decade ago, LAX was serving under 60 million passengers per year. In 2009, it hit a nadir of 56.5 million. Since then, traffic has absolutely exploded. Take a look.

We only have traffic through August of this year, but it looks like LAX is on track to be near 85 million passengers, far above what it was designed to handle. If you’ve been through, you know that it is bursting at the seams. The roadways are gridlocked, security lines are long, and taxi times are some of the highest you’ll see anywhere. Air traffic delays have become much more common. And yet, more and more airlines want to fly there.

We’ve already spent a couple years watching other airlines posture. American added flights until it could add no more due to physical gate constraints. It even went too far and had to pull back some. Delta is spending billions on its move to Terminals 2 and 3 where it will do major work to create a new home. Southwest has been waiting to grow until its remodel of Terminal 1 is done next year. And Alaska is bullish on LA after buying Virgin America. It seemed like the only sane airline was United, but now that’s out the window.

In the townhall, Kirby says he wants to add more flights to smaller destinations like Medford. Both American and Allegiant already serve that small market, but apparently United thinks there’s room for one more. He wants more markets like those to help feed big international flights, like the surprise announcement of LA to Singapore. In other words, he wants to re-build what United has spent years dismantling.

I find it funny that in the FlightGlobal article, Kirby is quoted as saying “Of the big carriers, we are the most profitable carrier in Los Angeles.” I guess he wants to change that. It’s hard to imagine how every one of these airlines can be successful financially in this market. As a consumer who lives in this market, I’m thrilled and expect to see price wars making air travel far cheaper than it should be. But if I’m an airline investor, I’m wondering why everyone wants to play this game.

It would be one thing if airlines could throw some airplanes into the market and see if it works, but it’s not that simple. The aging airport can’t handle much more, so a lot of expensive work is required to even be able to try to grow.

It’s clear where the airport is going from a design perspective. It’ll be carved up into 5 fiefdoms.

  1. Southwest will finish its remodel of Terminal 1 and it hopes to build a Terminal 0 to expand on the site of an existing parking lot. That’s an old engine plant and I imagine it will require some long and expensive clean-up work.
  2. Delta and SkyTeam will make Terminals 2, 3 and the north side of the Bradley Terminal into its domain. This multi-billion projects is underway but it won’t be done for quite some time.
  3. American and oneworld can control the south side of Bradley along with Terminals 4 and parts of 5. But it still has a problem with those remote American Eagle gates and will need to find a way to grow further (the rest of 5?) so it can make for a better passenger experience. It also can’t grow without more gates.
  4. Alaska will rule at Terminal 6, but it too has no room for growth even though it wants some.
  5. United is in the middle of its own massive remodel in Terminals 7 and 8. It wants to build Terminal 9 on the other side of Sepulveda (near where the remote Eagle gates are) so it can house its Star Alliance friends. That’s going to take years and a lot of money if it ever happens.

The unaligned airlines of the world will be relegated to wherever they can fit. We already see that happening today where some airlines have ticket counters in Terminals 2 or 3 but gates in Bradley. The new midfield concourse which is connected to Bradley will help when it’s built, but that only helps with having physical gates. There’s still the issue of gridlock on the roadways. The airport thinks the landside modernization program which will build a train and a new rental car facility will help, but that won’t be done until well into the next decade.

And ultimately, you can add gates and build trains, but without more runways, there will always be a cap on growth. Unlike in Atlanta where a fifth runway was recently opened, there is no prospect for any runway growth at LAX. Heck, the airport couldn’t even get the community to agree to move an existing runway a few feet closer to their homes to provide a center taxiway to improve safety.

So what does this mean? Well, there are billions upon billions of dollars of projects underway. Airline operating costs are going to go through the roof with this kind of spending. That means a flight like United’s to Medford is going to get awfully expensive to operate, and airlines may need to cut back. But in an arms race like this where every airline wants to “win,” it means irrational decisions get made.

Even with this mad spending, LAX will run out of room. And once that happens, then what? Long Beach and Orange County have strict caps. Burbank has a little room to grow but not much, and it has short runways so will never be more than a regional airport. Ontario is just about the only option, unless you want to go even further away from LA. It’s remarkable that a region that thrived and grew with the aerospace industry in its heyday has trouble even finding an airport with room these days.

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54 comments on “United Wants to Grow at LAX, But There’s Not Much Room… For Anyone

  1. LAX is effectively penned in by the surrounding neighborhood. Unless Los Angeles and the State of California want to spend tens of billions of dollars in eminent domain actions, the physical plant of the airport is what it is. We can make it pretty and nice and use it more efficiently, but there is a limit to what can be done.

    The problem is the same as the 1960s, on a far grander scale. In the 1960s, the number of flights grew exponentially and the facilities of the time did not have the capability to handle the volume. Boeing and Douglas built the 747 and DC-10 respectively (and Lockheed built the ill-fated Tri-Star) in part because of this problem.

    At what point does this and other airport congestion problems start to make the A380 viable?

    1. Davey – It doesn’t. Most of the routes out of LAX can’t support an A380. Upgauging from Embraer 175s to a C-Series can help, but the A380 is still a very niche case.

      1. The A380 comment was tongue-in-cheek, obviously. I agree that its doubtful there will ever be a need for the A380 on most global airline routes. The A380 will be to Airbus what the Tri-Star was to Lockheed or the 880s and 990s were to Convair — huge money losers.

        But the point was that the congestion of the 1960s at major airports across the USA led to the DC-10 and 747. For hemmed in airports like LAX, LGA and others, at some point the airlines will have to sub out larger jets for the mid-sized planes they fly today.

        Does it make sense that at some point we might see domestic Dreamliners, A350s or an older 777-200 or so? I gotta think that’s the trade-off if United really wants to serve Medford, Fresno, St. George, Utah and other places out of LAX.

        1. Davey – We already see that! United has pressed a fleet of 777s into domestic service with a few business class seats and a sea of coach.

          1. Trust me Cranky, I’ve seen that first hand! Those domestic 777-200s, candidly, make sardine cans look spacious! And, candidly, the plane is understaffed if the airline intends to provide even a modicum of service.

            But seeing a 777-200 or a 767 domestically for anything other than an occasional hub-to-hub or to Hawaii from the east or Midwest is still relatively rare in the Friendly Skies. It’s not going to happen anytime soon.

            I’m old enough to have remembered United DC-10s almost every hour from Chicago to the West Coast. I doubt we will see that again anytime soon, but

        2. Not sure why UA would even want to connect Fresno customers over LAX. The market for local travel between the two is limited by most travelers needing a car when they get to their destination, making driving more economical. If UA sees any local potential, they’d be just as well off starting Express service between FAT and BUR, ONT, and/or SNA.

          If they see more potential for connecting Fresnans to other destinations, they can increase capacity by upgauging the remaining Express flights to SFO, upgauging DEN to mainline, or starting flights to IAH or ORD, depending on where they see the connecting potential.

  2. What can you say, LAX is the 800 pound gorilla. I’d love to avoid it but it has the most frequency and cheapest fares. My only other non-stop option is John Wayne and the price is always double or triple what LAX is with usually not good flight time options. Besides, traffic on the 405 down there is no better than up at LAX. Depending on where I’m going I’d love Bob Hope or Ontario as options but adding a connection to make that happen is usually more hassle than LAX+traffic is. Someday that may change, but so far not yet.

  3. I have to question Kirby’s notion from the FG article that “The key to making Los Angeles work is really having lots of connectivity”. Aside from the fact the airport and airspace congestion mean that it’ll always be a hard place to run connection, LA really isn’t well positioned to capture a lot of flows aside from Hawaii, Australasia, and maybe some West Coast-Latin America traffic.

    Anyway, if they’re so much more profitable than anyone else (also stated in the FG article) despite having less domestic connectivity, that would mean it’s already “working” for UA now, wouldn’t it?

    1. Bgriff – In the world of airport runway building, that is incredibly recent. You can probably count on one hand how many US airports have opened a new runway since then.

      1. ATL’s current plan is to build a 6th runway between existing south runways and it should meet few objections.

        The large coastal airports have little to no physical growth potential, leaving capacity additions to larger aircraft and whatever Next Gen can wring out with increased ATC capacity.

        Given the sheet timing of other projects, there might realistically be little capacity left by the time UA is ready to build. Unfortunately, some decisions do have consequences and, just as at JFK, someone at UA thought it was a good idea to downsize LAX.

        I’m still trying to understand how Kirby manages to talk about how profitable UA’s operations are in so many different places and yet UA’s system profitability is in the bottom tier of the industry.

        It also might be worth waiting to proclaim that the “cats and dogs” will move around to accommodate continued growth of the big 4. It was one thing that Delta basically paid to move them to facilities that were nicer and in similar positions on the LAX domestic horseshoe. It will be something else to ask them to move to the MSC and I also am not convinced that having AA facilities spread over five terminals (including the Eagle’s nest) will be a viable solution.

        From a facility standpoint, I’m not sure any of the big growth projects at LAX are anywhere close to reality but they will be fun to watch.

  4. UAL was “flying high” at LAX until the pilot slowdown around 2000. Ever since then they have been retreating. UAL used to be in Terminal 6 also. It will take a commitment to return to that size.
    As for the CTA, until the peoplemover is finished it will be a disaster thanks to Uber. Before Uber the parking structure in busy times would have 1/2 hour lines just to exit and pay because your friend or significant other would drop/pick you up. Now all that traffic is waiting at the upper level curb.

  5. Proof that the more things change, the more they stay the same. Ergo that despite the marketing rhetoric that would have us believe otherwise, the airlines are still very hand-to-mouth REACTIVE in the way they do things. As you correctly pointed out: United did at one time have a massive, massive presence at LAX that they dismantled and now wish they had back. Everything you are saying-anyone with even one eye on the future instead of only what’s under their nose-could’ve seen this coming.

    And yeah what is it about ONT that just can’t seem to attract any traffic? Twenty years ago-before the housing bubble and growth in the IE-it had double the number of flights it has today. It is still east of the 605-hell really-east of the 15-where the growth has been for the last 20 years and will continue to be for the foreseeable future. Yet ONT continues to languish. Something isn’t computing here. Just like Fresno. What gives? Is it just old fashioned stigma that hasn’t gone away? Is it changing the travelling publics attitudes and habits? Maybe a little of both?

    I haven’t set foot at LAX in over a decade. And even then it was a mess. I can only imagine what it’s like now.

    United made its bed. Now they can lay in it. They really only have three options at this point: Accept the caps and limitations as they are. Buy out and merge with someone else. Or take a chance at ONT, which has tons of room and is begging for more service.

  6. I’m fascinated that MFR is Kirby’s example here. I’m glad and surprised that we’re on his radar. Alaska flew once daily MFR-LAX for years but just cut that route due to the Horizon pilot shortage. American just started the route in June.

    United has recently put a ton of seats on its SFO-MFR route, as much as 6 daily with 2 of those mainline aircraft, so I could certainly see the logic of taking a few of those and sending them to LAX instead.

    1. Arent those mainline flights just UAL saving overnight gate space at SFO? Arrives late-ish at night into MFR and departs first AM flight back to SFO. Same utilization in FAT and Smurf I think. In any case, enjoy the mainline flights!

    2. So given the proximity of SFO and the capacity there, why would United want Medford people connect in LAX if it is more costly to get them there? Is it to fill the long hauls from LAX, i.e., do they not have enough demand and could the SFO longhauls more easily filled by others?

  7. Lets not exaggerate now “taxi times are some of the highest you’ll see anywhere.”

    Have you been to airports back east like ones in NYC? LAX still has rather average taxi times for major airports in the industry. DOT publishes monthly stats on this, I would provide a link but dont know it its allowed in comments.

    1. James – You’re welcome to post a link here as long as it’s relevant. But I will say that if you’re using NYC as an example of how LAX taxi times aren’t that bad, that’s an incredibly low bar to pass. LAX taxi times are some of the highest you’ll see anywhere. That doesn’t mean there aren’t a few spots that exceed that.

      1. In my experience it’s not so much the actual taxi times at LAX that are bad, it’s gate availability. United and American are the worst offenders – they pad schedules so heavily that you inevitably land early and have to wait 30-60 minutes for your gate to open up. Given limited space on the ground for planes to sit, that often means a lot of aimless taxiing. I had a DEN-LAX flight this last summer that made five circuits around the maintenance area while we waited for our gate to open. When you’re actually cleared into a gate, taxi times aren’t bad at all – certainly nothing compared to ORD or DFW.

  8. LA/Ontario can be the perfect situation! Look at all the World Gateways….NRT, EZE, ICN, HKG, LHR, GRU, most of these airports are located miles from the city, in some cases farther than Ontario is to LA. However, all of these airport have some sort of link between the airport and the city – train, motorcoach, etc. For LA/Ontario to be successful, especially as an alternative to LAX, a link needs to be provided to the city. I suggest something like a Fly-Away service that serves LAX.

    And regarding LGB/BUR/SNA, SCAG could pressure the FAA to force cities to remove or soften restrictions on commercial flights. Although all 3 airports are ‘essentially’ single runway operations, LGB has the greatest potential with a 10,000 foot runway, able to accommodate widebody aircraft.

    SNA has close to 9 million annual passengers. LGB and BUR are about half of that. However, it’s not out of the question (especially with LGB capable to accommodate widebodies) for LGB to be able to have 9-10 million annual passengers. It’s a small chunk, but if BUR and LGB could accommodate 10 million each, and SNA 15 million, that’s almost half of the current 80 million passengers at LAX. Those numbers are easily doable at BUR and SNA, based on current gates. However, LGB would need to convert the 12th “remote pad” to an actual gate. These calculations are based on 8 flights per day, per gate @ 150 pax (except for SNA).

    1. There is a rail link…almost. Metrolink has a station near the airport but not directly at the airport. A people mover could solve that problem. The Riverside Line currently just runs weekdays, so that would need to be addressed.

    2. Spirit FF – The real problem is that there is no “city” to speak of. You point to other world cities that have a thriving center. In LA, yes downtown is thriving, but you have major business centers spread out everywhere. A train from Ontario to downtown LA does nothing for people in west LA, Century City, Warner Center, Long Beach, etc. Yes the metro rail network is being built out, but the travel times would be too great. So while I do think a train from ONT into downtown LA will help, it’s not the cure-all that it is in other cities just because of how LA was built. (I blame the auto manufacturers!)

      1. Yes, the layout of Southern California is very decentralized with a lot of decently sized cities many people have never heard of spread out over a large area. The Bay Area is similar. I’ve mostly lived on the extreme reaches of what could be considered the “Greater Bay Area”, as can be deciphered from my username, and most airlines’ focus on SFO has always been inconvenient for me. (Don’t worry, I understand SFO is a major hub) Public transit definitely exists to SFO, but it’s very disjointed, depending where you’re coming from. For example, to get to SFO from Sacramento, I’d have to get to the Amtrak station, and then take Capitol Corridor to Richmond and then take BART to SFO.

  9. With the MSC coming in future years, are there plans to allow drop offs/ticketing/etc. from World Way West (ie coming into the airport off of Pershing?) to alleviate some of the traffic issues on World Way East? This would likely necessitate an expansion of World Way West, and possibly Imperial Hwy between the 105 and Pershing, but could allow better traffic flow for the entire airport and relieve the Main Terminal Area.

      1. Big nope. El Segundo, Playa del Rey and Westchester would have a fit if passenger traffic started using Pershing Drive and World Way West. There were plans for a western terminal in the 1960s, but there were also plans for a Pacific Coast Freeway in those days, too. We’re stuck with the terminal roadway for the future, which literally gets worse by the day, and they seem to be in no hurry to break ground on the people mover.

  10. Great post Brett…

    You can answer this with a link or two, if that is easier.

    To a degree the total number of passengers going up in the graph for LAX is misleading…

    The total is the total, I agree, but of more interest is the number of local boarding passengers, vs. the number of connecting passengers.

    This is always a topic at DEN airport, with huge connecting traffic, vs. local boarding traffic, that the news media always skips this part of the story, only focusing on the big number.

    Can you dig up say 10 years of local, vs. connecting traffic at LAX. ?

    Can you find the same for DEN. ?

    It does not need to be in a graph, the raw numbers are fine.

    Best, Peter

    Boulder, CO. (ex Continental Airlines, DEN, the proud bird with the Golden Tail)

    1. Peter – I don’t have access to that without doing some serious number crunching, but my guess is it probably hasn’t changed all that much despite all the additional capacity.

      1. Brett, I am going to contact a local Denver friend, who is now on the Denver City Council, and was a 20 year (ish) transportation reporter for the Rocky Mountain News in Denver, until it closed up shop, in Feb. 2009. I am going to see if he can get the DEN airport to generate 10 years of numbers for DEN airport, as I requested above, and possibly the same numbers for LAX airport, for comparison.

        I will let you know the outcome of my request…

        The Rocky Mountain News,(founded 1859) and the Denver Post, (founded 1892) both fought each other here in the Denver metro area for more than 100 years… I miss the Rocky…

      2. Sorry I’m late to the party here! But O&D (local) traffic at LAX has been increasing, roughly at the same rate as overall traffic growth. And average local fares were increasing 2009-2014 as well (have since fallen about 15% from their 2014 peak).

        LAX annual bi-directional sum of O&D traffic:
        2009: 33.2M
        2010: 34.4M
        2011: 36.5M
        2012: 37.5M
        2013: 39.2M
        2014: 41.1M
        2015: 44.0M
        2016: 48.3M

        In Denver, on the other hand, local traffic has increased proportionately more than connecting traffic … some of it is likely F9’s transition away from a connecting hub.

        DEN bi-directional sum of O&D traffic / total revenue traffic:
        2009: 24.3M / 48.9M
        2010: 25.8M / 51.3M
        2011: 27.0M / 52.3M
        2012: 27.4M / 52.4M
        2013: 28.6M / 51.6M
        2014: 30.2M / 52.4M
        2015: 31.5M / 52.8M
        2016: 32.9M / 56.7M

        1. Dakota – Thank you for that. I should clarify that I meant I doubted the percentage of local traffic had changed. Thanks for grabbing those numbers.

  11. What ever happened to the plan to use Palmdale as a third international airport for LA. Plenty of room to expand and they already have rail service nearby.

    1. Letstry2 – That’s dead. The last, heavily-subsidized service finally went away a few years ago. Palmdale is just not close to any of the important business centers. Further, while there is Metrolink, it takes 2 hours just to get to downtown LA. That’s useless for most people.

      1. Jeremy – Yep. SBD may be desirable by Amazon since there’s a distribution center right there, but for the population centers around LA, Ontario is better for pretty much every one.

  12. I fly out of MFR all the time. This market may be small, but the airport keeps breaking records every month. We lost the Alaska Flight so there is opportunity on that route for sure. United beefed up the SFO and DEN routes with larger aircraft to support the demand. Delta just added a SEA flight and American entered the market earlier this summer with both LAX and PHX service.

  13. I would have thought that UA would use SFO for connecting small cities to their system over LAX since they have more options out of there?

    It also seems like Mr. Kirby really liked connecting out of the way places to major hubs as well.

  14. Plenty of room at the reused Norton Air Force Base (San Bernardino International Airport), me thinks.. opportunity?

  15. I’m curious whatever happened to LAX’ Imperial Terminal. I remember some friends flying in and out of there in the mid-80s. Possibly on commercial charter flights.

      1. Thanks Brett! Could it be converted back to a terminal if needed?

        Also, is the Private Suite located there?

        1. No to both. The agreement with the surrounding neighborhoods requires development to be in the central terminal area.

          The private terminal is nearby.

    1. World Airways used it…. I lived on the east coast in the early ’80s and flew World in and out of West Imperial a number of times… it was the cheapest nonstop from BWI to southern California, perhaps the only nonstop. Wide-bodies too (DC-10s).

  16. UA used to control so much gate space at LAX. All of T8, T7, most of T6, plus the remote commuter terminal. It was a strategic error to give up so much space, particularly T6 which connects to the private FIS. Especially once the CO merger happened they should have fought to keep more space in T6. More short -sighted decisions in the lying Smisek era

  17. LAX mostly has nice cute terminals (some bland but at least clean) so usually you don’t have to walk too far for a connection, but the lack of rail transport is a major PITA.

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